Things We Read Today (15), Thursday

Debt and Manipulation of Housing Prices

Contrary to some unfair comments made thereto, Ted Nesi has a good report (because it touches on aspects many reporters wouldn’t think to touch on) about Gina Raimondo’s endorsement of a bond issue, on November’s ballot, that would borrow $25 million for use in building and renovating low-income housing.

My first response was the snarky one: That Raimondo wants to celebrate her insufficient reduction of pension debt with more bonded debt. But the plan merits a more thoughtful response, mainly because there’s been long consensus that housing is too expensive locally for many Rhode Islanders. Here’s Bob Baldwin, of the RI Builders Association:

“Why do we need an affordable housing bond?” Baldwin said. “The fact of the matter is that market-priced housing in Rhode Island is not affordable. That’s really the big picture problem that we’re faced with.” Municipal governments and the state should get rid of permit requirements and regulations that prevent developers from building homes at prices that average families can afford, he said.

Of course, it isn’t surprising that the Builders Association would advocate for funds and for easing standards for builders. RI Foundation CEO, formerly of Fleet Bank, Neil Steinberg meets Baldwin somewhere in the middle and then does him one better, suggesting that the money should come from tax revenue, so there’s “a steady source where people know it will be there every year.”

Here’s the problem: RI’s single-family home inventory continues to climb, even as its median sales price continues to decline. Dropping a wad of subsidized new construction in the low end of that market doesn’t strike me as a very good solution to the state’s continuing housing crisis. Indeed, there’s something fundamentally unfair about hitting taxpaying home-owners with a bill for bonded debt (or for annual tax revenue) that will drive down the prices of what is, for most of them, their largest asset.

If they approve the bond, in other words, Rhode Islanders will arguably be funneling money through government in order to make their own houses worth less. What ought to happen is a natural evolution reflecting people’s values and the economy, with poorer folks’ finding a way to pay a little more, homeowners’ acknowledging that they have to expect less, and governments’ laying off their requirements for renovations and sales.

It is because such practice is the opposite of Rhode Island’s tendencies that trying to do good winds up pushing the state deeper and deeper.

Campaigning Against Its Own People and Their Way of Life

Partisan squabbles aside, and assuming that the reports are accurate, this is simply not acceptable:

U.S. Embassy advertisements condemning an anti-Islam video appeared on Pakistani television on Thursday in an attempt to undercut anger against the United States, where the film was produced. Hundreds of youths, however, clashed with security officials as they tried in vain to reach the embassy in Islamabad amid outrage in many countries over the film’s vulgar depiction of the Prophet Muhammad.

The ads reflected efforts by the U.S. government to distance itself from the video in a country where anti-American sentiment already runs high. … State Department spokeswoman Victoria Nuland said the ad was produced by the embassy, which spent $70,000 to air the 30-second spot on seven Pakistani television stations.

Under no circumstances should the federal government be publicly and officially condemning the legal speech guaranteed under our Constitution, much less to angry mobs riddled with hostile forces, and much less by forcing American taxpayers to cover the expense.

The school department in Cranston recently had to remove a generic prayer banner donated to a high school a half-century ago by its initial class on the grounds that it constituted an endorsement of a particular religion in violation of the First Amendment. That banner expressed much less of a position on religious differences than an official condemnation of a specific film on a religious subject. And the Obama administration’s attitude compounds that affront by cheapening the right to free expression also in that amendment, as well as encouraging hostile forces in other nations to keep up their barbaric activities as a means of pushing transcontinental censorship.

The Constitution Is the People’s Responsibility

A similar note is sounded in this portion of an interview with conservative economist and writer Thomas Sowell:

One of the great problems is that people do not react.

I mean, when all is said and done, the Constitution of the United States is a Sowell on stopping officials’ ignoring the Constitution: set of words on pieces of paper. The only way that the Constitution can protect us is if we protect the Constitution. If we rise up and revolt, if we vote out of office people who violate the Constitution, then of course it will mean something. If people can do this, say a few pretty words, and we say, “Oh, well,” then the Constitution will over time erode to the point where it will mean absolutely nothing. It will be nice words on paper, but people with power will just do what they feel like.

Keep in mind that Sowell applies the violation pretty broadly, to include not only executive-branch excesses but also, for example, the Senates repeated refusal to pass a budget.

QE3 Already a Failure

It seems like Federal Reserve Chairman Ben Bernanke’s announcement of the Fed’s plan to embark on an indefinite third round of quantitative easing (i.e., money creation) has been a daily source of material for me. Today is no exception, thanks to a skeptical column by Forbes columnist Louis Woodhill:

The futility of QE3 was made clear by the financial markets’ reaction to the Fed’s announcement. The Real Dow, which is the Dow Jones Industrial Average divided by the price of gold, actually fell by 0.65% on September 13, the day that QE3 was announced. While the Dow gained 1.6% on the day, gold went up by 2.2%. In real terms, QE3 made the economic outlook worse, not better.

The historical record is clear. Prosperity (including strong growth in real GDP, total employment, and real wages) occurs only during periods when the Real Dow is rising.

Woodhill offers other evidence of his claim that QE3 has already proven a failure, as well. Frankly, the impression the Fed is giving, at this point, is of a driver speeding downhill and continuing to fiddle with the steering wheel and brakes even though both proved not to be working some miles back.

Subsidiarity, Solidarity, and the Invisible Hand

Another video that made a few minutes of my time well spent, today, is from a series of regular video blogs by Fr. Robert Barron. This one is, by title, on “Paul Ryan and Catholic Social Teaching,” but it’s a bit more a matter of theology and political theory than a review of an individual politician’s stated policy:

The key part comes when Fr. Barron discusses the ideas of subsidiarity and solidarity:

Subsidiarity is a principle that says, in matters social and economic, we should always have a kind of preferential option for the more local solution. So for example, there’s a traffic flow issue in a suburban neighborhood. What don’t you do? Well, you don’t make an immediate appeal to the President or to the governor or to the Congress. What you might do is appeal to the local municipal authority first. …

It’s balanced, in Catholic social thought, by the principle of solidarity, which says what? We are connected to each other by very profound bonds, both natural and supernatural. We are responsible for each other.

What’s especially interesting in Fr. Barron’s commentary, what makes it relevant on a free-market Web site, and what makes it indicative of a direction for political theory that I sincerely hope will bring both religious conservatives and libertarians to a natural common ground is that he goes on to speak against Adam Smith’s “invisible hand” theory.

Namely, that giving people maximal economic freedom will allow an invisible hand to work toward beneficent ends in the society. I think he elides an important factor, thereby making me hopeful that there is still ground of compromise to cover.

Barron says that Smith’s principle conflicts with the idea of solidarity to the extent of calling it a “negation.” Meanwhile, he says, the opposite, solidarity without subsidiarity, leads to an “implicit totalitarianism.”

He goes on to describe the solution to the problem as a balance. What’s curious, though, is that he still offers an endorsement of various entitlements and welfare programs, as if government is the inevitable expression of the solidarity portion of the formula.

But the “invisible hand” has to operate even in the schemata that Fr. Barron describes. It is an intangible weighing of interests and needs that determines, under subsidiarity, how far up the solidarity ladder the people should climb in order to ensure justice.

Government, I’d propose, is a blurry lens for determining which direction to go, because it only allows a limited range of highly corruptible options by which we can help each other. Moreover, it inherently makes social concerns a matter of divisive contention, rather than community unification.

Through government, we can tax people on one pretext or another so that we can hand money to others on one criterion or another. The way the invisible hand works in government is by responding to the amount of incentive that each faction has to change the law, which must apply evenly over however large a group is represented as the electorate.

If we open up our view of solidarity to mean “society” without meaning “government,” whole new routes are available to find balance between the competing principles. Money is given freely, and alternatives to money can be found, whether material donations or personal assistance that governments can only mirror by taxing citizens in order to pay people to offer it. (That is, the government can’t redistribute coats; it must confiscate money in order to pay for new coats.)

In the broader society, the possibilities for interaction blend from community, to religious, to personal, to familial, and on and on. That is in contrast to government, where the interaction is compulsion and welfare.

"RI’s single-family home inventory continues to climb, even as its median sales price continues to decline"

Left on it's own, that should achieve an equilibrium.

As to Fr. Barron, I have not seen a "for sale" sign on St. Peters. That was built on the backs of poor people buying indulgences, perhaps it is time for a little "solidarity".

Kevin McCarthy

Warrington, you Know-Nothing. For all its manifold faults, no institution in history has had a more salutary effect on humanity than the Holy Roman Catholic Church. Hundreds of millions of people have been fed, clothed, nursed and educated through its. beneficence.

Justin, I fail to understand the outrage over US officials attempting to distance the United States from an amateurish little bit of agit-prop which has already
contributed to the death of 4 Americans and who knows how much ill will. In the real world of diplomacy, as opposed to the rarefied air of intellectual, constitutional posturing, you play the ball where it lies. Much of the world has little understanding if the individualistic society and personal freedoms which we enjoy. In their world, a video like this must have government sanction. It's too bad their view is so wrong, but I congratulate Obama and Hillary for trying to educate them, and I would do the same if it were Bush and Condi.